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11 benefits of prioritizing customer retention

Choosing a restaurant when everyone wants different cuisines feels impossible. Each individual tries to sway the group in their direction, but the misalignment just leaves everyone hungry.

The same happens when only select teams in your organization recognize the benefits of customer retention and work to keep customers around for the long term—there's no real alignment and some of your customers may feel dissatisfied with your product and seek an alternative solution to their problems.

Last updated

2 Nov 2022

Getting your whole team on board with a new way of thinking is a tall order—unless everyone understands why the effort is worth it. It may not be obvious at first glance, but retaining and keeping existing customers happy is everyone’s responsibility—not just a single department. 

This guide covers why customer retention matters across your entire company, so everyone realizes its impact.

Love it or leave it: use PX insights to drive customer retention

Hotjar’s product experience (PX) insights tools give you a front-row seat to what customers do and how they feel, so you can drive retention.

11 customer retention benefits of putting customers first

When you think about the benefits of repeat customers, your first inclination would be to see dollar signs.💲 Profits and your company’s health are a part of it, but there are far-reaching customer retention benefits for your business and customers on both technical and personal levels. Explaining how customer retention helps each team by sharing real-time product experience (PX) insights encourages your entire organization to empathize with customers and prioritize retention.  

Here’s what to expect when you make customer retention a company-wide goal:

1. Engage and delight customers

We would all choose ease over frustration, and your customers are no different. Retained customers are happier customers who spend more time engaging with your product, which needs to help them seamlessly accomplish their goals. But you won’t get to that point on luck—you need to put customers first.

Although there are many things that companies need to do to deliver an outstanding customer experience, the most important thing is to have a company strategy that is customer-centric.

You just cannot get to ‘outstanding’ if your overall company mission is about creating shareholder value and not about delivering value to your customers.

Harley Manning
Vice President & Research Director, Forrester

But what does it mean to put customers first? The foundation of customer retention strategies is to empathize, listen, and observe. In practice, that includes collecting insights about the product and user experience (UX), and asking customers what they’d like to change or add to your product or service.

Pro tip: use product experience (PX) insights tools, like Hotjar (that’s us👋) Heatmaps, to visualize customer behavior on your website or product and find out what frustrates them.

For example, if you have an ecommerce business selling shoes, create and analyze heatmaps of your product pages to see where customers click the most. Perhaps you discover that they’re clicking on images that look like buttons or certain content, like product descriptions to learn the material of your shoes. Then, you can optimize your content and make clickable elements clearer to reduce confusion and create a better shopping experience.

Hotjar's Heatmaps tool helps you visualize customer behavior, so you can optimize key pages and product elements. 

2. Maximize profits and lower costs

There are two options to increase revenue—sell to more people or sell more to each person. As you increase retention, your customer acquisition cost decreases because you see more long-term sales to each customer. Getting your entire organization on board with customer retention helps you increase profits without changing anything in your sales or marketing funnel

Let’s take it a step further: if you make more money per person and onboard more people, you maximize profits. But how do you do this? Use surveys to ask your most engaged customers about their pain points and what other tasks they want to accomplish with your product. Then, take their feedback to create a new suite of products or features you could upsell (or cross-sell) to your current users and leverage to attract a new customer segment. 

3. Outlast the competition

Anyone who cares about outperforming the competition should pay attention to customer retention. Focusing on increasing customer retention gives you two competitive advantages—financial longevity and a unique selling point (USP) that makes your customers choose your solution over the competition.

Let’s start with finances. Retention is the opposite of customer churn—the number of people who decide to stop using your product or service—which decreases your profit. While your competition strives for growth at any cost, you need to focus on retaining as many customers as possible. A company with higher customer retention than the competition will grow more over time, even with lower annual recurring revenue.

#Company A (blue) retains 90% of its new MRR after one year, while Company B (red) only keeps 60%. Despite Company B earning nearly twice as much initially, Company A’s retention leads to consistent growth while the competition stagnates. Source: Hotjar
Company A (blue) retains 90% of its new MRR after one year, while Company B (red) only keeps 60%. Despite Company B earning nearly twice as much initially, Company A’s retention leads to consistent growth while the competition stagnates. Source: Hotjar

An organization with strong customer retention rates also withstands economic uncertainty better than one with high churn rates—because loyal customers are less price-sensitive, and you’ll experience less boom and bust from growth and churn.

High customer retention also helps your sales and marketing team stand out from the competition. For example, if you’re a digital marketer or researcher, conduct interviews with long-term customers and then share their testimonials on your website and social media channels to highlight social proof and your USP. You can also collect customer satisfaction scores via surveys about how long customers stick with your company to share on sales calls with prospects and convince them to adopt your product. 

#Use Hotjar Surveys to collect a customer satisfaction score and retain customers
Use Hotjar Surveys to collect a customer satisfaction score and retain customers

4. Make informed decisions to save time and effort

You could get lucky by making random product decisions and changes that help you retain customers. But working on assumptions wastes time and effort—and makes less of an impact. 

A group of engaged and retained customers, rather than a revolving door of one-time visits, gives you more opportunities to conduct product research, so you can make better decisions that drive business growth and reach your customer goals. 

Focusing on customer retention by using product experience tools like heatmaps and recordings to really understand your users helps you prioritize your backlog and make design and UX decisions that positively impact the customer experience.

How to make informed product decisions and retain customers:

Find bugs quickly with recordings

Traditional website analytics can tell you that a page has a high bounce rate, but they don’t tell you why. Watch session recordings to see customers navigate your product and pages, so you can find and fix bugs fast.

Perfectly place CTAs with heatmaps

Heatmaps visualize where visitors look and how far they scroll down a page. You can see where most users leave a page to ensure your CTA is in the right place for future visitors. 

Collect new product ideas with surveys

Use on-page surveys to hear from users about product improvements they want to see. Persistent trends clue you in that an idea is worth exploring. 

5. Impress investors and get buy-in 

If you want to get investments, you need to impress stakeholders. Tracking, measuring, and making product changes and updates based on customer retention metrics—like your cost of acquisition and customer lifetime value (LTV)—indicate your company’s health and help you create a strong case to get stakeholder buy-in. 

Keep sharing your customer retention metrics with stakeholders after you get buy-in to update them on your progress. As a bonus, you can use your investment to create better products for customers.

This is exactly what Hotjar did. Our goal and commitment to create customer-centric digital experiences helped us raise $600 million in a Series F investment round that we use to improve and expand our product faster than ever. For example, Hotjar recently introduced a Dashboard to group and view key user metrics in one place so it’s easier to spot potential problems early.

6. Create an advanced product for long-term users

As your customers grow and change, so should your product. Long-time customers might develop new needs and priorities as their business or life grows alongside yours, but luckily, you’ll have the PX insights to cater to them. 

For example, filter Hotjar Recordings to watch sessions of customers using your product or website for at least a year or are on a particular pricing tier. Then, use Hotjar Surveys to ask that particular set of customers what else they would like to achieve with your product. Focusing on long-term customer insights reveals new tasks or jobs to be done (JTBD) to address, which helps you create an advanced product that prevents your current customers from outgrowing you and prepares you to help future customers reach their goals.

How RazorPay used surveys to create a better product and increase customer retention

Razorpay, a payment gateway solution, wanted to gauge customer sentiment toward a newly designed dashboard by releasing it to a small group of customers. Since they wanted to create a product that increased engagement and retention, they used a Hotjar Survey with an optional open-ended response. While website analytics could show whether customers used the dashboard, the survey revealed why they felt the way they did. 

The result? Razorpay used the feedback they collected to improve their dashboard’s design, increasing customer satisfaction by 40% before releasing it to their entire audience. 

Showing customers you value and implement their feedback strengthens their relationship with your brand—and customer-driven improvements that boost satisfaction ultimately lead to higher retention rates.

Hotjar's Survey tool asks customers to rate a feature or design element on a scale of 1-10, then gives them space to talk about why they chose that score.

7. Use extra resources to experiment with new marketing channels and campaigns

Higher customer retention means your marketing team doesn’t have to find more customers to hit the same revenue goals constantly. As acquisition costs relax, your marketing team can use their extra resources and time to experiment with new channels and campaigns. 

However, your team won’t be randomly guessing or making assumptions about what works and what doesn’t. The customers you engage and retain give your team a pool of qualitative data to create accurate customer personas that you can use to make decisions, like what challenges to address through content marketing campaigns or how to talk about your product in relation to your audience’s main goals.

🔥How to create accurate customer personas

A customer persona is a semi-fictional character based on your current (or ideal) customer. You can use a customer persona survey to learn about your long-term customers, which is the blueprint for precisely who to target in your marketing campaigns. 

Get the user persona survey template here.

Hotjar’s user persona Survey asks questions about your customer and how they use your product or service, like whether it’s for work or personal goals.

8. Create a self-growing customer base

Prioritizing customer retention efforts supports your growth goals and bottom line—because you can use your existing customers to increase conversions. The secret? Creating a community of loyal customers and giving them incentives to promote your product, whether it be through word of mouth or on social media.

But how do you figure out who makes repeat purchases and who your loyal customers actually are? Use an NPS survey to find your happiest customers, and then reach out to them to hear what they love about your product or service. A Net Promoter Score® (NPS) measures brand loyalty, satisfaction, and customer engagement. The longer you retain customers and increase NPS scores, the more people and businesses you can highlight in promotional customer stories. 

You can also show appreciation and grow your business with customer loyalty programs, referral rewards, and communities. For example, if you’re selling homemade jewelry on Shopify or an ecommerce site, you could create special discount codes for your loyal customers to share with their friends and followers on Instagram and other social media platforms, and give those customers a discount every time someone uses their code to purchase a product on your site.

I have colleagues who have preferred a vendor just because of the strength of the customer community. You not only get valuable feedback from customers, but customers get to feel like they have input on the product, and they often enjoy networking with other members.

Sarah Metcalf, the Head of Customer Marketing at Hotjar

Want to build a new community? Here are a few tips:

Pick a goal

What do you want customers to gain from your community? For example, you can create a platform where your customers learn from their peers, stay up to date with new developments, or get advanced tips about using your product or service.

Create unique content

Ask your audience about their preferences and create content and a discussion that they won’t find anywhere else to build meaningful customer relationships.

Create connections between customers

Encourage connection within the community through digital events, AMA discussions, and a place to share their experiences.

9. Improve onboarding and product adoption

Product onboarding builds a foundation for customer retention and vice versa. Creating a seamless, easy, and predictable user onboarding process leads to quicker product adoption and a better customer experience, making users more likely to stick with your service.

You need data to improve your onboarding, and long-term customers are a treasure chest of insights. More active users give you better data about how they use the product, which you can use to create more relevant onboarding. For example, if you have a SaaS product management app, you can watch and analyze recordings from experienced customers to see what order they complete tasks in or how they use different features together. Then, you can model your guided onboarding on a tried-and-tested workflow.

#Hotjar Recordings lets you see exactly how users navigate and use your product, so you can make  changes to retain customers better
Hotjar Recordings lets you see exactly how users navigate and use your product, so you can make changes to retain customers better

10. Field fewer customer support requests

Your customer support team is there to help users—but answering the same questions over and over again can increase support wait times for customers. Happier and more product-knowledgeable users mean fewer support requests, so your support team can devote more time to other projects or new users. 

Use PX insights to help support and product teams work together to create the best customer experience possible. For example, Marlin, a digital signage company, combines support tickets and PX insights to solve issues—like finding and fixing website bugs—quickly. Marlin’s Product Manager Stephen Ippolito shares:

When we receive a support ticket, we use Hotjar Recordings to find that user's session with their consent. We then watch it, log the bug, and attach the recording to the ticket. This saves hours of work since we don’t have to recreate the problem itself.

11. Increase employee morale and productivity

Moods are contagious, and a positive product and customer experience feeds a positive work experience. A community of satisfied, long-term customers boosts employee morale and makes them excited to create better products that really help people. 

Happier employees improve productivity, creativity, enthusiasm, and commitment to quality. A positive workplace also increases employee retention, saving recruiting time and costs and keeping work running smoothly.

If you aren’t retaining your customers, you’re likely to have low employee morale as well. People want to work for companies that make people happy, and when few people seem to like your product, it’s hard to stay motivated to work on or sell it.

Sarah Metcalf, Head of Customer Marketing at Hotjar

Let customers show you what they want, then share it with your team

Customer retention stems from a customer-centric culture as much as a set of strategies. The best way to get company-wide alignment on customer retention is to share quantitative and qualitative customer data with all teams.

For example, leadership will be excited about reinvesting in retention when you can show them—via heatmaps, for example—how your product updates increase activation. Your marketing team will also be excited to use feedback from long-term customers for persona research. 

Find and share customer insights that influence retention

Hotjar’s tools reveal user motivations, frustrations, and preferences, so you can make customer-first choices. 

FAQs about customer retention benefits